Why Penney, Macy’s, Gap, Other Retailers May Have To Close More Stores

NEW YORK (CBSNEWS.COM) – Shares of JCPenney slumped more than 6 percent on Tuesday after the surprise departure of CEO Marvin Ellison raised fresh concerns about the struggling 110-year-old retailer’s future. But Macy’s, which has faced its share of challenges, is on the upswing after reporting better-than-expected results last week and issuing bullish earnings guidance. That’s stoking investors’ hopes of a possible turnaround at the largest U.S. department store chain.

Shares of Macy’s have surged more than 31 percent this year, outperforming the S&P 500 index, which has gained about 2 percent. Penney shares have slumped more than 25 percent.

In the category of retail disappointments, shares of Target plunged nearly 6 percent on Wednesday after the big-box retailer’s results fell short because of unseasonably cool spring weather. Performance was also hurt by price discounts and its $7 billion investment in revamping its 600 stores. Luxury brand Tiffany wound up on the plus side, reporting a blowout quarter that launched it shares by more than 23 percent. It also approved a $1 billion share-buyback plan and forecast 2018 results that exceeded Wall Street’s expectations.

Overall, however, retailers’ problems abound. During the recent Penney earnings conference call, Ellison described the industry as the “most challenging and competitive” it has been in 50 years.